Council, public weigh in on new police contract

Pension contributions will be raised, benefits for new-hires reduced

The Pleasanton City Council moved forward Tuesday night toward approving a new contract with the Pleasanton Police Officers' Association that requires members for the first time in a decade to contribute directly to their own retirement plan.

The new contract, which is expected to be approved by the council next Tuesday and take effect then, also will institute a so-called "two tier" plan that will reduce benefits for those hired after Feb. 7.

For those now on the police force, the new contract will require them to start paying directly into their CalPERS pension. For the last 10 years, the city has been paying the full 9% contribution based on an agreement in lieu of the police receiving salary adjustments.

Starting with the signing of the new contract, police will pay 3% of their salaries into the pension fund, followed by 6% on July 1, and then the full 9% starting July 1, 2013.

For new employees, the formula that allows police to retire at age 50 with 3% of their salary based on years of service would be moved to age 55. Based on the current formula, officers who have 30 years of service in law enforcement in California are eligible to receive 90% of their salary, based on their three highest years of earnings. Now eligible for this benefit at age 50, new employees would have to wait until age 55 for it to become effective.

Medical benefits for police hired after the new contract takes effect also are being reduced. Currently, police personnel who retire receive medical plan benefits for themselves and their spouse calculated on a percentage based on years of service with the city. The new agreement modifies that benefit from two parties to the employee only, and terminates when the employee becomes eligible for Medicare.

More than 30 of the 73 police officers now on the force sat together in the council chambers at Tuesday night's special City Council meeting, with many of them walking to the lectern to say they support the new contract.

Officer Dave Batoy, president of the police union, told the council that while police recognize their duty to help the city reduce its unfunded pension liability, the new contract will impose financial hardships on its members.

"This new contract will require officers to contribute roughly $1,000 of their pay each month and significantly alters health care benefits for those who now join the police force."

Julie Yuan-Miu, Pleasanton's assistant city manager and Director of Administrative Services, who worked with City Manager Nelson Fialho in negotiating the new contract with police union representatives, said the new agreement will result in a savings to the city of approximately $2.4 million through the fiscal year 2013/2014 budget.

Despite the police accord, Bart Hughes, a financial analyst who frequently talks at City Council meetings about the city's pension problems, said the new contract won't have any impact on Pleasanton's unfunded pension liability.

To address that liability, the council recently authorized setting aside $1 million from a surplus at the end of the last fiscal year to start paying down the deficit.

"But that won't help," Hughes said. "The unfunded liability which stood at stood at $121 million has grown to $137 million, so a lot more has to be done."

Fialho said now that the police contract has been settled, the council can turn its attention to the unfunded pension liability. He told council members Tuesday that he will be back with an action plan within the next few months.

The City Council will meet at 7 p.m. next Tuesday to ratify the new police contract and discuss other issues. Council meetings are held at the Pleasanton Civic Center, 200 Old Bernal Ave.

Posted by Caring citizen
a resident of Amador Estates
on Feb 1, 2012 at 10:49 am

So very unfair. A police force who have protected the community of Pleasanton from the many problems of other cities because of their pride in the city and their duty to serve. How many other city employees had to sacrifice the many benefits taken away from the police force?

Did anyone read this thing? I quote here:
For new employees, the formula that allows police to retire at age 50 with 3% of their salary based on years of service would be moved to age 55. Based on the current formula, officers who have 30 years of service in law enforcement in California are eligible to receive 90% of their salary, based on their three highest years of earnings. Now eligible for this benefit at age 50, new employees would have to wait until age 55 for it to become effective.
This is why we are in so much financial trouble.

Posted by Mittens
a resident of another community
on Feb 1, 2012 at 11:12 am

There is simply too much waste in government, and that's why we are in so much financial trouble. I would think for goodness sakes that a 20% cut across the board of all government workers would be a fair formula. Heck, we'd be a healthier community, and the safety net would catch all the downsized employees, so we wouldn't have to worry about them. Regarding the police, some of the local bakeries might take a hit with reduced donut sales. But everyone has to do their fair share.

Posted by Frank Lynn
a resident of Valley Trails
on Feb 1, 2012 at 11:28 am

They already put their lives on the line - and now they're taking a leadership role in terms of taking reduced benefits, contributing more to their pensions. Bravo to them - I just hope we don't lose the good ones to other locales that can pay better. I would hope our city administration would follow their lead.

Police and firefighters are two groups of government workers who wholeheartedly deserve to retire early at age 50 or 55. It's a hard, demanding physical job with daily risk of injury or death. However, government administrative shouldn't be allowed to retire at full pension until 62-67 - just like the rest of us in the private sector.

What was not addressed in this article is how much of a raise they will be getting. It's likely that their raise will exceed the pension contribution and they will come out ahead of where they were already.
How is it reasonable for a person to retire at 50 with 90% of their SPIKED final year of wages and collect that, plus raises, for the balance of their lives? This is not even considering the fact that many, if not most, take other jobs in the private sector and continue to collect full taxpayer funded pensions at the same time.
2% at 65, no paid medical, no spiking and reduce the pension dollar for dollar -- permanently! -- for any outside earnings. We simply cannot support this early retirement option and ever hope to reduce our liabilities.

Posted by District resident
a resident of Foothill High School
on Feb 1, 2012 at 1:38 pm

Did you catch the Dave Batoy quote? Then did you do the math associated with that quote.
Here is what the article said...
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Officer Dave Batoy, president of the police union, told the council that while police recognize their duty to help the city reduce its unfunded pension liability, the new contract will impose financial hardships on its members.

"This new contract will require officers to contribute roughly $1,000 of their pay each month and significantly alters health care benefits for those who now join the police force."
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OK for those who didn't do the math.
Batoy is saying officers will have to contribute $1,000 per month.
That, to cover the 9% "employee share" of the pension contribution, that the city has been paying for them (in addition to the other 28% the city has been paying to cover the city's employer share.

Now do the math. If $1,000 equals 9% of the officers monthly pay, the you need to divide $1,000 by .09 to discover the officers monthly pay.
So you get officers pay being $11,111 per month.
Or $133,000 per year.

Yes folks, these officers who have their president telling the public that the new contract "will impose financial hardships on its members" are in fact getting $133,000 per year on average and that does NOT count any overtime, since overtime is not used to calculate pension contributions.

I'm only using the figures given by Dave Batoy.
I don't know about you, but if a officer is making $133,000 per year before overtime, I'm thinking that paying the employee share of the lucrative pension isn't really creating "hardship" compared to what most folks in society are facing.

A second point. Something that police unions have been giving up all across the state. Giving back the 50 year old retirement age.
Why do they so easily give it up? Because few officers ever retire at that age. Think about it, you want to get your 30 years, and ZERO officers are hired at age 20. The reality is that the average retirement age is from 56 to 57. Only a small percentage retire before age 55 because so few begin prior to age 25.

IF you were unaware of it, it costs Pleasanton, San Jose, Oakland, and other cities, about $185,000 per year to keep the average officer on payroll. (That does NOT count any overtime) That is the total cost of employment for the city, minus overtime.

Go to the following site and you can see all the Pleasanton police officer salaries and benefit costs.Web Link

For example, take a mid range officer, a sergeant, a place where many officers end their career, and the salary upon which their pension is based. Other officers are higher pay for lieutenant etc.

The mid-range TCOE (total cost of employment is about $210K to $220K
Their 2010 base pay for sergeant, without any overtime or benefits or pension, is $111,938
Most have $18,348 paid into their medical, dental, and vision.
The city pays $41,121 for the employer portion of the pension.
The city also pays $12,964 for the employee portion of the pension.
The city also pays about $2,500 for "misc"
On top of all that, the city then pays for any and all overtime the officer may earn.

That is for a typical sergeant. So if he/she puts in the typical 30 years, the retire at about age 57, then spend the next 25 years (more for female) on a pension of about $100,000 per year.
(90% x $111,000) Their medical is covered from age 57 until they get on Medicare at age 65.

If they retire as a Lieutenant, their base pay jumps up to between $130K and $150K, and the pension goes to from $117K to $135K.

OF course there are some officers who during their 30 years choose to remain as a patrol officer and don't eventually become sergeant, etc.
Their base pay in 2010 was $94,230 before any overtime or benefits and pension payments.

Anyway all the details are public, Web Link
It is valuable for the public discourse to be guided by real facts.

Posted by District resident
a resident of Foothill High School
on Feb 1, 2012 at 3:10 pm

Caring Citizen, Please, we talk about the compensation in Pleasanton and you throw in the salary of the city manager in another city. I see, and I suppose a CEO of Sybase or Chevron is making over 10 million. Why didn't you include that? What is left? Normally the next thing we hear in this line of thinking is that everyone else became millionaires during the dot-com boom (which BTW, ended in 2000) while public employees were working for peanuts.

Thus, no citizen should comment on city salaries or pensions.
Do I have that about right? I mean your logic.

Then you throw in the trump-card.
"Everyone had the choice to become a police officer - some didn't have the courage".

I see, the other 99% of the public are cowards, thus should never comment on police salaries or pensions. All I did was give a few public figures, the actual facts, as listed in the San Jose Merc/ Contra Costa Times data base. Public facts.
Just as there was a dot-com boom, and a housing price boom, it is not beyond reason that there was a bit of a public employee compensation boom that needs some current adjustments, given the times.

I should think that police officers paying their own portion of the pension contribution is not asking too much without it being labeled a "hardship". After all, as posted above, while the sergeant is being asked to pay the $12,964, the city is still paying $41,121 into the pension fund. That is a 76% city share.

For a citizen pointing that out, our "courage" is questioned?
The new agreement is a good step forward.
Over the past 15 years, after the passage of SB400 in 1999, public employee pensions ballooned in comparison with traditional rates, which prior to that had been considered more than fair and adequate to attract a excellent public work force.

Posted by Vinny
a resident of Vineyard Avenue
on Feb 1, 2012 at 4:20 pm

It is interesting that Bart is the only one bringing up pertinent issues (unfunded liability from 120 to 137 million).

We have elected officials who hire consultants to tell them what to do. Meanwhile BartHughes is spelling it out for everyone and he is just a concerned citizen.

So Nelson Fiahlo (because of that pesky Bart) closes the meeting by saying he is going to come up with a plan to address the unfunded pension liability. Really? That would be after you ink the cotnract with the cops.

Let the cities crash and burn like GM and Chrysler than we'll start over.

Posted by District resident
a resident of Foothill High School
on Feb 1, 2012 at 5:36 pm

Caring Citizen, you say "You started the debate on very personal, personal information - what is your salary"

Excuse me, you call it "very personal, personal information".

Sorry that you label a salary range for city workers as "very personal".
First of all, I didn't put out anything about a particular individual's compensation.
Only the general salary for sergeants and lieutenants as well as officers. That is public information published by news organizations after being given out by the City of Pleasanton.

The only individual I named, was the one quoted in the article as being the head of the police officers union.
I said nothing about his particular compensation.

So what are you labeling as "very personal information"?
Would you prevent the public from knowing what the compensation is for all public employees in the city? The courts have ruled on that disclosure. It is the public's right to know so they can have input with city leaders on what they feel is proper policy.

The way to stop the erroneous stories about salaries and especially pensions, is to get the true facts out there. Otherwise you frequently find wild exaggerations in comments. Such as police officers retiring at age 50 with a 90% pension.
I'll bet there hasn't been a single police officer retiring at age 50 with a 90% pension in Pleasanton in the last 20 years, if ever.

When everyone knows the true facts, then good decisions can be made.
For too long, much of this information has been only available to a closed circle, kept from the public.

Posted by Arnold
a resident of Another Pleasanton neighborhood
on Feb 1, 2012 at 5:45 pm

Posted by Caring citizen, a resident of the Amador Estates neighborhood, 1 hour ago
So?? The City Manager of San Ramon makes $356,541.per year.
Everyone had the choice to become a police officer - some didn't have the courage.

Caring citizen, I'm not sure an example of San Ramon's bad management practices is justification for dismissing an argument related to Pleasanton contracts. As to your claim that some "don't have the courage" to do the job of a police officer further misses the mark.

This isn't an issue of the dangers of a job (which are less, especially in Pleasanton, than many occupations including some jobs that fall under the PCEA contract), or what San Ramon is doing, as much as it is an issue regarding the trust taxpayers have bestowed upon city management and city council to effectively use taxpayer dollars to provide quality services at a reasonable price. It is extra important that they do this because the services being provided are not subject to competitive bid (city services are really a monopoly and the unions have used this, as well as their political will (dollars) to stack the deck of negotiations in their favor). They have been very successful in inflating the value of their services relative to the private sector. With a big push from an economic downturn that has severely impacted the private sector that pays for the services, at the same time we are seeing exploding pension costs (that will explode even beyond the current doubling of cost within two years) at every level of government employment, including school districts, the problem really boils down to Fairness and Math.

The FAIRNESS portion of my little rant has to do with taxpayers guaranteeing pension benefits that far exceed what is required to maintain a consistent lifestyle during the transition from employment to retirement (even ignoring the absurdity of allowing people to collect six figure pensions beginning in their early fifties). The 3@50 formula, and the 2.7@55 formula, EXCEEDS what is fair or reasonable. The RETROACTIVE portion of this arrangement makes it borderline criminal. I say that because both of these pension formulas exceed the standard retirement theory that you need 65-75% of employment income during retirement and the retroactive portion, as well as city council approved reduced retirement ages, only exacerbates the problem. Paying lifetime medical on top of excessive pensions should reduce those numbers. What we now know is that all these pension promises are consuming an even greater share of city budgets which is leading to reduced service levels at an increasing cost, as well as the cry for increased sales taxes and parcel taxes. The state and many cities are asking taxpayers, most of which do NOT have guaranteed pensions and have seen their retirement income diminished during the recession, being asked to take their reduced dollars, dig deeper into their own pockets, to contribute to the funding of these unsustainable and bloated city pensions. How does that make sense to anyone that isn't a union employee/beneficiary of this exorbitant city management/city council/union endorsed and approved generosity? If you can justify that you can justify anything?

The Math portion of my little rant has to do with government at all levels, pushed by the unions, who have conveniently ignored the divergent trend lines regarding revenue and cost. They seem more than willing to increase compensation at a rate beyond revenue growth and then increase fees and promote "Temporary Taxes", which eventually become a "song an dance" approach to budgeting about every five years, to the detriment of the middle class tax payer. If that doesn't work we here about how our lives won't be saved because it affects the FD budget, our kids won't be able to compete in the real world because the teacher union says so, and we will be mugged because the police union sights a police union funded study that says we need more police. What is important is that we ignore these ridiculous claims and live within our budget.

What has our local Pleasanton government done to effectively manage tax payer resources? I would say that Pleasanton is a beautiful place to live and all that live here appreciate the hard work that has gone into this city's success. I would also say that the current PD contract is a first step in the right direction but doesn't go far enough. Unfortunately, going back to 1997, much of the hard work done over past decades has been unraveled during the past 15 years. During that time, the last 15 years, employee's have had their retirement age reduced increasing the years the city pays for health care while also increasing the cost of pension benefits, their pension calculation enhanced (many cities have done the same thing but they haven't provided retroactive pension benefits), and their Cost of Living Allowance (COLA) increased well beyond the actual increase in the cost of living. At the same time the contracts have expanded wage increases and increased the number of "ADD-ON PAY" that further increases employee salaries (really a hidden cost). Over the past 15 years city management has completely failed the public on the issue of budgeting and employee compensation.

We have been paying top dollar for PD services yet we have tens of millions of dollars in unfunded pension and health care liabilities. How does that compare to the excess pension funds of just 10 years ago, that were mostly taxpayer funded, compared to the current 100's of millions in pension and health care debt that we have today. How have we gone from excess pension funding in 2002, to a conservative 137 million in pension debt, and growing, in 2012? Does anyone really consider that good fiscal management? I hope not!

The city just contributed 7.8 million toward a relatively small police departments unfunded pension liability just over six months ago. That is 7.8 million beyond the excellent level of compensation they already receive (BTW, that 7.8 million is worth about 7 million today) that is both unaffordable and unsustainable. Now city management wants to take another million of surplus dollars (?) to pay down the pension debt of excessive and unsustainable pensions. I wonder if the CM and Mayor actually consider that sound financial planning.

That is 8.8 million dollars that won't be going to anything that provides additional value to this city. That 8.8 million, now 7.8 million because CalPERS has lost that much over the past six months, won't go toward parks, bike trails, or anything else.

District Resident said: "Yes folks, these officers who have their president telling the public that the new contract "will impose financial hardships on its members" are in fact getting $133,000 per year on average and that does NOT count any overtime, since overtime is not used to calculate pension contributions. I'm only using the figures given by Dave Batoy. I don't know about you, but if a officer is making $133,000 per year before overtime, I'm thinking that paying the employee share of the lucrative pension isn't really creating "hardship" compared to what most folks in society are facing."

Well, a $1000 per month hit to the take-home pay isn't a minor matter. If they make $133K per year then their take-home pay after taxes is, what, maybe around $8K per month? Also, the article says that the city has been paying this 9% of salary pension contribution "in lieu of the police receiving salary adjustments", which is a fact that should be taken into account as well.

I do agree that 50 is an awfully low age to retire with 90% salary for 30 years of service, and it's good they're changing that.

District Resident: "Just as there was a dot-com boom, and a housing price boom, it is not beyond reason that there was a bit of a public employee compensation boom that needs some current adjustments, given the times."

District Resident, you bring up a very interesting point! Now I know that in my own case, I did enjoy a bit of a "compensation boom" during the dot-com days because although I didn't work for a Silicon Valley company I do work in scientific research. But do you have any evidence that public employees like police officers benefited any way from the dot-com boom? I can't think of any reason why a boom in high-tech salaries would translate into higher local police salaries, can you? Without seeing a history chart of local police salaries, I would guess that local police salaries were largely disconnected from high-tech salaries. Do you have any evidence?

All you seem to offer is a tepid statement of "it is not beyond reason that there was a bit of a public employee compensation boom that needs some current adjustments". Well, I'm going to have to challenge you on this statement. I never heard of any sort of (non-tech) public employee compensation boom during the dot-come days. As far as I can tell, they - including police officers - were pretty much left out of the party. If you have evidence that says otherwise, please share it.

Posted by Arnold
a resident of Another Pleasanton neighborhood
on Feb 1, 2012 at 6:32 pm

"District Resident, you bring up a very interesting point! Now I know that in my own case, I did enjoy a bit of a "compensation boom" during the dot-com days because although I didn't work for a Silicon Valley company I do work in scientific research. But do you have any evidence that public employees like police officers benefited any way from the dot-com boom?"

Sam, I guess you haven't been paying attention. The pension plan the PD receives, and all Pleasanton employees really, is better than what 99.9% of what Silicon Valley employees have received. Compensation and bonuses, even in Silicon Valley, are a fleeting thing. Paying 43K for every 100K in payroll (I don't know anyone receiving that kind of bonus) for public safety city employees, while guaranteeing a 7.75% return from day one on the job until the day they die (who gets that?) is better than any deal the private sector is offering. Outside of GOOGLE employees, I can't think of anyone that can comprehend the bonus numbers (pension deal) that Pleasanton employees are receiving (all CA Gov. employees for that matter).

I also appreciate the efforts of the citizens that have stood tall in the face of union ridicule.

Posted by Arnold
a resident of Another Pleasanton neighborhood
on Feb 1, 2012 at 6:55 pm

"Posted by b(renda) Nice work, TEA Partiers.
I'm still waiting for Bart Hughes to quit whining and offer to take a City job at $25k/year. He seems to think it is good enough for everyone else. Why not him? Hmm..."

Arnold :"Sam, I guess you haven't been paying attention. The pension plan the PD receives, and all Pleasanton employees really, is better than what 99.9% of what Silicon Valley employees have received."

The PD pension plan may be relatively attractive, but the overall compensation isn't that attractive. Otherwise, all those "Silicon Valley employees" would be rushing over to Pleasanton police officers, wouldn't they?